The USA is emerging out as one of the leading countries in the field of a solar energy market. The solar PV capacity of USA has reached to 21.3 gigawatts in the first quarter of 2015, which is primarily driven by the utility-based solar market (Please read "Top 10 solar powered countries"). The USA has installed around 6.2 gigawatts of solar PV systems in 2014, a growth of around 30% with respect to the previous year 2013. The year 2014 has witnessed the highest number of solar PV installations in a year.

Overview: Facts & Statistics

Capital: Washington DC

Area: 98,57,306 \(Km^2\)

Population:318.9 million (2014)

Location Coordinates:\(38.88^0\) North, \(77.02^0\) West

The western and the south-western region receives relatively more solar radiation than rest of USA. The states in this region are:

The Compound Annual Growth Rate (CAGR) of these categories of since 2014 are as follows:

Sector

CAGR since 2010

Residential Solar PV

58%

Non residential Solar PV

45%

Utility based Solar PV

111%

You can see that the utility-based solar PV is growing at the fastest rate among the three categories.The year 2014 has the highest number of Solar PV installations of around 6.2 gigawatts, the growth can be shown as follows:

Year

Cumulative Capacity in MW

2000

18

2001

29

2002

52

2003

97

2004

155

2005

234

2006

339

2007

508

2008

819

2009

1,257

2010

2,153

2011

3,954

2012

7,323

2013

12,074

2014

18,274

You can see that solar PV growth has been quite rapid and fast in past few years.

What are the factors which are responsible for such impressive growth in the solar PV market?

The significant factors which accelerated the growth of solar PV market in USA are as follows:

(1) The incentive of solar investment tax credit

The owner of the solar system is eligible for financial incentive of 30% of the total expenditure on the system, with no maximum limit. This rebate is applicable to the following categories:

Commercial sector

Industrial sector

Agricultural sector

Municipal utilities

Cooperative Utilities

Investor owned utilities

Net effective tax = Total tax payable minus (30% of the expenditure on the solar system)

The homeowners can avail this incentive by purchase & installing the solar system at their homes. The owner can claim this 30% of the expenditure on solar system by reducing it from the total taxes payable by him in that financial year.Because of this incentive big companies like Wal-Mart, IKEA, and Macy are going solar with acceleration. Also, more than 4000 schools in USA have adopted solar energy to meet their daily energy needs. This initiative has made them an energy independent and they are saving money.(Insight:How much is your solar roof top saving in different months of the year?)Other than this, the friendly environmental reviews, cash grant in terms of tax credit and guaranteed loans are the factors pushing the growth of solar PV in USA.

(2) The falling cost of solar PV installation

The declining cost of installation has played a significant role in the growth of solar PV market in USA. According to the latest reports, the solar system installation prices are dropped by 9% - 12% in the year 2014.The Residential solar PV market has crossed 1 GW installed capacity mark in year 2014. As residential solar PV systems are generally smaller than Non-residential and Utility based power projects, therefore installation cost per watt is higher.

The solar system installation cost has dropped from $ 3.83 to $3.43 in 2014.

There is around 11% decline in the installation cost of Non- Residential solar PV system installation cost from 2.53 to 2.25 per watt in 2014

The Utility solar PV constitutes more than 60% of the total solar PV installations in 2014. As these projects are done on large scale, therefore the cost of installation is lowest among the three categories. The cost of installation per watt is reduced from $ 1.77/watt to $ 1.55/watt, a more than 12% fall in the cost of installation in year 2014.

The above are the average prices, because the actual prices vary from location to location in the country.

(3) The facility of Net Metering

The USA is pioneered in Net Metering facility. It is a mutual agreement between the owner of the solar power system and the state electricity department that if excess electricity from ownerâ€™s power plant is generated then it will be sold and transferred to the utility grid. In case of shortage or deficit of electricity then the owner can buy from the utility grid. The whole process of net energy transferred is managed by bi-directional energy meter. This facility is a win-win situation both for the utility company and the owner of the power plant. The utility company is getting electricity without any investment in setting the plant while on the other hand the owner of the power plant is selling excess electricity and earning profits.The most favorable American states for Net- Metering with A grade rating are:

Arizona

Colorado

California

Connecticut

Delaware

Maryland

Massachusetts

New Hampshire

New Jersey

New York

Ohio

Oregon

Pennsylvania

Utah

Vermont

Virginia (West)

Conclusion

The demand in the Residential market is growing consistently while the Non-Residential Market is struggling to grow because of the reduction in the incentive schemes in Arizona and California. The Growth primarily driven by utility solar market, it constitutes more than 60% of the total solar PV installations. California is again number 1 in terms of the solar PV installations in the country.The incentive solar investment tax credit is going to expire next year in 2016, which may lead to the decline in the growth of solar PV installations unless government extends the tenure of the tax credit or come out with a more lucrative solar policy to boost the growth of Solar PV in the country.